Ethereum: What Happens to Coins After Bitcoin Cash Fork?
On August 1, 2020, Ethereum (ETH), the world’s second-largest cryptocurrency by market capitalization, will split into two separate blockchains: Ethereum Classic (ETC) and Bitcoin Cash (BCC). The move is intended to provide a more secure, decentralized, and censorship-resistant blockchain for users who want to keep their existing ETH investments.
Background
Ethereum is not a cryptocurrency; it is a decentralized application platform that allows developers to build smart contracts and decentralized applications (dApps) on its blockchain. The Ethereum network is the largest distributed computing project in the world, with over 70 million users and a market capitalization of approximately $500 billion.
Bitcoin Cash: A Fork from Bitcoin
Bitcoin Cash (BCC) is a fork of the Bitcoin network, but it has distinct differences from Bitcoin. The original Bitcoin protocol has been criticized for its slow transaction processing times, high fees, and limited scalability. To address these issues, developers created BCC, which aims to improve Bitcoin’s speed, security, and usability.
The Fork: ETC vs. BCC
On August 1, 2020, the Ethereum community will split into two separate blockchains:
- Ethereum Classic (ETC): This will be a full-featured blockchain with its own scripting language, EVM (Ethereum Virtual Machine), and smart contract functionality.
- Bitcoin Cash (BCC): As mentioned above, this will be a lightweight, fast, and low-cost cryptocurrency with some differences from Bitcoin.
What happens to coins after the fork?
The outcome of the fork will depend on the decisions of individual investors. Here are some possible scenarios:
- Investors who want ETC: If you are an Ethereum investor who wants to keep your ETH investment and stay loyal to the original Ethereum blockchain, you will need to upgrade to ETC using a hardware wallet or compatible software wallet.
- Bitcoin Cash (BCC) investors: Those who prefer BCC will receive their coins automatically upon joining the new blockchain. If you have already purchased BCC through an exchange or third-party service, your transaction will be reflected on both blockchains.
- New users: If you are new to cryptocurrency investing, you may need to explore alternative options and research the features, risks, and potential returns of each coin.
Key Differences Between ETC and BCC
To illustrate the key differences between ETC and BCC:
- Scalability: ETC is designed for high-traffic applications, while BCC is more suited to small users.
- Security: ETC uses a hybrid proof-of-work (PoW) system that combines traditional PoW with SHA-256. BCC uses the lightweight BIP39 seeding system for seed wallets and has improved security features compared to Bitcoin.
- Transaction Fees: BCC is significantly cheaper than Bitcoin’s transaction fees.
Conclusion
The Ethereum fork into ETC and BCC marks an important milestone in the development of the decentralized finance (DeFi) and cryptocurrency space. While there are risks, many investors have successfully migrated their coins to ETC or BCC. As with any investment decision, it is important to do your research, understand the differences between ETC and BCC, and consider your individual financial goals before taking action.
Disclaimer
: This article is for informational purposes only and should not be considered investment advice. Always do your due diligence and consult with experts before making any decisions about investing in cryptocurrencies.
